Starting a Medical Billing Business => Starting Your Own Medical Billing Business => Topic started by: GenerationalResources on April 01, 2015, 08:55:13 AM

I worked for an insurance company for 23 years processing claims, and I was approached recently by a mental health provider to do his medical billing. I have degrees in psychology and mental health counseling, so I thought I would do it, but I'm not sure what steps to take. I have registered my business name, I have an EIN, I have purchased medical billing software, and have presented the client with a contract for 8% of billed charges. The provider stated that he has seen others bill for 4%. So my first question is what is reasonable?

Also the provider has many questions for me such as credentialing issues, and what charges they can bill. My question is as a biller, exactly what the parameters of my services should be? I have other questions but I don't want to overload the board right now. I look forward to hearing response.

I worked for an insurance company for 23 years processing claims, and I was approached recently by a mental health provider to do his medical billing. I have degrees in psychology and mental health counseling, so I thought I would do it, but I'm not sure what steps to take. I have registered my business name, I have an EIN, I have purchased medical billing software, and have presented the client with a contract for 8% of billed charges. The provider stated that he has seen others bill for 4%. So my first question is what is reasonable?

Also the provider has many questions for me such as credentialing issues, and what charges they can bill. My question is as a biller, exactly what the parameters of my services should be? I have other questions but I don't want to overload the board right now. I look forward to hearing response.

BASICALLY, WHERE DO I GO FROM HERE????Thanks!

Wow. Not sure where to start. I guess with Congratulations! Getting your first client is the hardest. :)

OK, so what is reasonable. Well there are a lot of variables that affect that. Your location, your experience, the specialties, etc. We have found that billing services charge anywhere from 4% (possibly lower for off shore but that's a whole different topic) - 13% (personally I don't know how anyone could get paid that). But before I go further I must mention that many feel that percentage billing is not a good way to charge. It is the most common way, but is actually considered fee splitting in several states. With that being said I'm going to answer your question. When we started 20 yrs ago we started at 4-5%. It was too low. We couldn't do a good job and still make enough money to pay ourselves. We went up to 6 and then eventually 7. Whenever a provider says "that's high, other services only charge 5%" I say "You get what you pay for." I do a good job, I'm very thorough and I make sure that the provider collects all he is supposed to. The services that charge 4-5% in my opinion have to cut corners somewhere. The ones I know personally do not do aging reports, do not send regular patient statements, and do not handle denials. I'm worth every penny that I bill my provider for. I am fair, but I am good.

Regarding credentialing, we do help our providers when needed. We do charge separate fees but we charge less for providers we bill for than we do for other providers.

Your parameters are going to be what you set them. Most billing services do not like to get involved in credentialing. If you are not going to be involved then you should establish a relationship with someone who will do it for them so that you can at least refer them to someone. As for helping them with what they can charge, you want to stay away from actual coding (unless you are a certified coder). It is ok to guide them, give them some tips, or resources, but don't let them think that you will do it all for them. We tell providers "if we see something that we don't think is right, or something that you should possibly be doing differently, we will tell you so that you can decide."

I worked for an insurance company for 23 years processing claims I was approached recently by a mental health provider to do his medical billing

Wow that sounds like how I started.. I was a claims examiner as well.

If you intend to start your business and you quote 8%, you will always have the doctor tell you they know someone else to do it for 4%. Of course when I hear less than 6% I immediately think "offshore" ::) :o If I'm told someone can do something cheaper, I usually give them my card and walk away, they will be back. With your years on the other side, that's INVALUABLE..trust me. That was my smoking gun when I started marketing.. so you have a gold mine, don't undercut yourself at all! I live in NY which doesn't allow physicians to enter contracts for a % of revenue as Michele mentioned, there are a few states that don't allow it. I started out with a % when I lived and worked in NJ, but the best decision I ever made was moving away from % billing. I invoice based on a flat fee which is actually based on an hourly rate + expenses, with sliding scale to accommodate growing practices. Works great. I get paid for ALL work. I think in general, billing companies are moving away from %.. makes for messy exit, pain in rear when you have refunds, etc. And then there is the common sense theory.. you should get paid for YOUR time. Professionals get paid for their time and experience, it's that simple. I do think the new biller needs to charge a %, only because they are inexperienced and really don't know what their time is worth or what they can do per hour or how long it will take.. BUT, you have extensive experience from the other side. Billing is just reversing the side of the fence you were on..that's it. You've also worked on the complicated and extensive systems insurance companies have to process claims.. so practice management software will be like learning the ABC's for you.

Thanks Guys! This is something I've wanted to do since 2006 but things just never worked out. This is the first time I've gotten this far in the process. I am so glad to have found this site. So I will be asking a lot of questions. I'm supposed to meet with the provider next week to finalize the contract. The software I purchased is HealthFusion's Meditouch. I hope this was not a bad decision. What concerns me is that this provider has never billed before and I want to make sure that I set the right expectations. and also that I meet those expectations. I know this is just the opposite of what I have done for years, but when I read the other posts on the forum, I feel that there is a big piece that I'm missing. But it may just be that I am not familiar with some of the lingo that is used for terms that I know as something else. Another question that I had was do I actually need a business license in addition to registering my LLC with the state, to run this business from my home in Georgia?

Another question that I had was do I actually need a business license in addition to registering my LLC with the state, to run this business from my home in Georgia?

Every state pretty much has a hub for small business startup, I found Georgia's HERE http://www.georgia.org/small-business/start/

Specific things to consider for starting your own medical billing and practice management company are things like insurance both business and liability (also called E/O; Errors & Omissions), compliance plans, policies and procedures, and it might be a good idea to put together a business plan as well. With your contracts you will also want to make sure you have the appropriate HIPAA BA signed (Business Associates), just remember that having that BA doesn't make you compliant, it just states to the client you are. You will also want to check your county/town for any zoning restrictions for businesses.. I've seen billing companies get a hard time from their county or town on zoning issues.

You will do fine. Did this come to you? Or where you looking into this prior to this client getting in touch with you? I ask because I was approached too while I was working at the insurance company and never even thought about having my own business, I was pretty happy where i was.. That was in 1997, I of course had to resign due to conflict of interest after I signed my first client. It all came at me completely unplanned. I decided at that time the way to go was to just envision the OTHER side and reverse how I worked. You have a lot of advantages here and you will want to capitalize ON those when you are ready to market for additional clients. If you would like some ideas, feel free to email me at linda@billerswebsite.com :) My first marketing was the only marketing campaign I had to do for the first 5 or 6 years! I got lucky :) but my experience on the other side was so invaluable and I used it. :)

Linda, this just came to me. I was doing my internship at an agency and I met a guy who does consulting and he had a client who is just starting up. His client asked him to recommend someone to do his billing, so the guy called and asked me if I knew anyone who did medical billing, so I figured this was my chance. And since he is just in the start-up phase, I figured I could be ready to go by the time he was ready. He recently told me that May 1 is his go date. So I'm trying to be ready by that time. But I had so many questions that I did not know who to direct to, and then I came across you guys while I was searching specifically for a medical billing forum. I would really like to take you up on your offer and contact you directly. I just want to make sure that I'm ready to go when the time comes.

I looked at the link that you sent and it is very helpful; still I was not so sure of what requirements applied to me and which ones did not. So any assistance would be so very helpful. I'm just so glad that I found this forum.

Hi, welcome to the forum, and congrats on getting your business going!

You said you purchased Meditouch. I used that program for two years for a remote client I had, who had purchased the full suite of software from HealthFusion. I don't know if you just purchased the PM side(if that is even possible), or the full suite, which includes EHR, scheduling, clearinghouse, etc. Normally, as the biller, you just need the PM software, so I hope that is all you got, because the full suite can be very expensive, and they raise the prices each year, it seems(the doctor I billed for dumped them due to price after two years). I work with about seven different softwares, and Meditouch is not tops on my list when it comes to several things. I trained myself on it, but that is because there was no free training available for me, so I hope you did/will get free training, and support when needed. If you aren't used to PM software, the set up, demo entry, claims entry, and payment application can be very confusing/tricky at times.

Here is an example...you have ERA's come in, and you apply the ERA's with one click of a button, and think you are good to go. The problem is that if there are any denied charges on that ERA, you won't know it unless you read through the ERA claim by claim. Other software I use alert you ahead of time as to if there are denials on an ERA, so you know to research the denial, or even better, they move the denied charge into a denial area. When I was using Meditouch, they had no features like that, and it caused a lot of problems.

Another example would be their claim scrubbing software isn't very accurate. I didn't use it because I didn't need to, but when I did test it out on various claims, there was always something it either missed, or had wrong.

HealthFusion told us they would need 6 weeks from purchase to the go live date, in order for everything to be in place. Reality was more like three months. EDI enrollments were botched, ERA enrollments were botched, data transition got messed up...there were a lot of problems. The doctor didn't get paid on most claims for about two months, and was very upset with HF about that. Hopefully they have improved things in these areas since I stopped using them about six months ago.

Correct me if I am wrong, but it sounds like your client is brand new to practice, if they are asking about credentialing, and what billing codes to use. Normally, in a situation like that, I would say that they would need a highly experienced biller to help them. BUT...you have an extensive insurance claims background, and two degrees in the field you will be billing which is a huge plus, so my advice to you would be to study up on everything you can find related to mental health billing CPT codes, the upcoming switch to ICD-10, as it relates to DSM-V, CMS guidelines/LCD's if the provider will be billing Medicare/Medicaid, and any LCD's for commercial payers they may also be contracted with, or consider contracting with. Also basics like HIPAA, Stark Law, OIG, etc.

Credentialing is hard to do, and unless you have experience with it, I would refer that to someone who specializes in it. I have seen it go very wrong when someone has tried to do it without the right knowledge. Hopefully the provider already has any needed NPI's, EIN if needed, and is already contracted with insurances, if they plan on being contracted at all. If not, they will most likely need help, and I don't know if that is something you can or want to do...it isn't easy, and it takes time, and can't be done on a percentage basis, that is for sure.

As for your parameters as their biller, and your fee...I agree with what Michele said, completely, and have this to add:

Will the doctor have staff who will be entering demo info on each patient, doing insurance verification, obtaining necessary pre-auths, etc? Or does the doctor expect that YOU will be doing all of that? Because there are billers who do all of that, and those that strictly enter charges, send claims, apply payments, do claim follow-up/AR, send patient statements, and then do collections work. What does the client think they are hiring you to do? What are you willing/able to do? I don't bill mental health, but I imagine there could be more insurance paperwork that needs to be done then with other specialties, such as pre-auths, etc.

Which leads to your fee...you came up with 8% as what you want to charge. You are providing the software and eating the cost on that(ideally, the provider already has software, and you use theirs, so you don't pay for that). Then there is what you will be doing billing-wise, and other expenses. Then you have what the provider expects to bill and collect each month. If they are just starting out, what kind of receivables will they have? Do you have any numbers from the provider on that front?

I think 8% is fair and reasonable(but I don't know how that equates out to an hourly rate for you, which is important), based on what they would have to pay an in-house biller in salary and employment taxes, and their own software, had they gone that route(have they figured out those expenses and considered it in their equation?). Sure, they can get a different billing company for 4%, but they will get probably just the basics for that, and from an off-shore company to boot. As has been mentioned, you get what you pay for.

Feel free to message me if you need further advice/guidance. I don't own a billing company, so can't really help with the business set-up part, but I have been billing for twenty years, work for several billing companies, and also manage a specialty physician practice full time. If your client is just starting out, they may want advice on from you on certain things regarding policies/procedures, and if you need help, I could help.